Attorney Timothy P. Crawford, CPA, CELA*, CAP**
wanted to share this information with you.
Tax Considerations For Caregiver Children
Offices in Racine and Brookfield
Crawford, Crawford & Stutt
840 Lake Avenue, Suite 200
Racine, WI 53403
Toll Free: (888) 634-6675
(262) 634-6659
E-mail: tpc@execpc.com
Website: www.TpcLaw.com
Attorney Timothy P. Crawford, CPA, CELA*, CAP**
wanted to share this information with you.
Offices in Racine, Brookfield and Milwaukee
Crawford, Crawford & Stutt
840 Lake Avenue, Suite 200
Racine, WI 53403
(262) 634-6659
e-mail: tpc@execpc.com
Website: www.TpcLaw.com
by: Sharon Kovacs Gruer, CELA
While handling a parent’s care, a child may avail herself of certain tax benefits. A child
who is supporting a parent may be entitled, under certain circumstances, to claim the
parent as a dependent on the child’s tax return and may deduct certain medical and
nursing home expenses. See, IRC Section 152.
Internal Revenue Code Section 213 (a) allows a deduction for the expenses paid for the
medical care of a taxpayer and the taxpayer’s spouse or dependent (if not compensated by
insurance) to the extent that the expenses exceed seven and a half percent (7.5%) of
adjusted gross income.
If the child contributed more than half of the total spent for the parent’s support, if the
parent is a citizen, income does not exceed a certain amount and the parent is not filing a
joint tax return, the child may claim the parent as a dependent.
Even where the child contributes less than half of the parent’s support, if the child is part
of a group that provides more than half of the support, where such child contributed at
least ten percent (10%) of the support, no other person contributed more than fifty
percent (50%), and each other person who contributed at least ten percent (10%) signs a
waiver agreeing that she will not claim the parent as a dependent, the child may claim the
parent as a dependent. In calculating support, the parent’s income, including social
security, is taken into account.
If a taxpayer is not married and supports a parent, she may be also entitled to the “head of
household” filing status. Even if one cannot claim a parent as a dependent, a dependent
care credit may still be available under certain circumstances.
The definition of medical care includes the “diagnosis, cure, mitigation, treatment or
prevention of disease, or for the purpose of affecting any structure or function of the
body, or for transportation to such care”. See, IRC Section 213(d). Amounts paid for
qualified long term care services are also deductible, such as necessary “diagnostic,
preventive, therapeutic, curing, treating, mitigating and rehabilitative services,
maintenance or personal care services which are required by a chronically ill individual,
and are provided pursuant to a plan of care prescribed by a licensed health practitioner.”
See, IRC Section 7702 B.
Non-prescription equipment, supplies and diagnostic devices are also deductible to the
extent that the medical care expenses exceed seven and a half percent (7.5%) of adjusted
gross income. See, Revenue Rule 2003-58.
In contrast to non-prescription equipment and supplies, over the counter drugs are
generally not deductible. See, IRC Section 213 (b). A prescribed drug is defined in IRC
Section 213(d)(3) as one that requires a prescription of a physician. Since aspirin does
not require a physician’s prescription, it is not deductible. Insulin, however, is deductible
according to IRC Section 213(b).
The amount of the cost of a nursing home that a taxpayer may deduct as a medical
expense depends on whether the patient’s presence in a nursing home is for medical
reasons or not. If a parent requires nursing home care for medical reasons, the entire cost
of the care may be deductible as a medical expense. However, if the principal reason for
the nursing home placement is not medical care, then only that part attributable to the
medical care is deductible.
If a patient needs medical care, it is unsafe for the person to remain at home, and
institutional care is medically required, the cost of that care is deductible as a medical
expense. IRC Regulation 1.213-1 (e)(1)(v)(a) provides, for example, that medical care
includes the “entire cost of institutional care for a person who is mentally ill and unsafe
when left alone.” This cost of care includes meals and lodging. See, Counts v
Commissioner, 42 T.C. 755 (1964), acq., 1964-2 C.B. 4 (1964); PLR8215023 and PLR
8518061; See, also, IRC Section 7702 B (c).
If the parent’s principal reason for placement at the nursing home is not medical care,
then only that part of the cost of care in the nursing home that is attributable to medical
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care is treated as an expense for medical care. In such a situation, the cost of meals and
lodging are not treated as an expense for medical care. See, IRC Regulation 1.213-1
(e)(1)(v)(b) and Ball v Commissioner, T.C. Memo 1978-384, 37 T.C.M. 1573 (1978). In
such event, the tax preparer should obtain a breakdown from the nursing home as to the
medical fees component.
Internal Revenue Publication number 502 provides a list of items including medical
expenses, that are deductible, including but not limited to expenses to cure alcohol
addiction, ambulance service, artificial limb, artificial teeth, bandages, birth control pills,
Braille books and magazines (to the extent that the cost is greater than the cost of regular
printed editions), chiropractor, contact lenses, crutches, certain dental procedures, certain
drugs, eyeglasses for medical reasons, eye surgery, hearing aids, hospital service, lab
fees, prescription medicines, nursing services, optometrist, psychiatric care,
psychological care, wheelchair and x-rays.
A taxpayer can also deduct as medical expenses, subject to the seven and a half percent
(7.5%) floor, amounts paid for special equipment installed in a home or for
improvements, if their main purpose is medical care for the taxpayer, her spouse or
dependent. The cost of the improvement is reduced by the increase in the value of the
property, and the difference is considered a medical expense.
Some improvements which do not usually increase the value of the home include the
construction of entrances or exit ramps, widening doorways, modifying hallways,
installing railing or support bars, lowering or modifying kitchen cabinets and equipment,
installing lifts, modifying stairways or adding handrails or grab bars. See, IRS
Publication Number 502.
Cosmetic surgery is not deductible unless it is necessary to “ameliorate a deformity
arising from, or directly related to, a congenital abnormality, a personal injury resulting
from a car accident or trauma, or a disfiguring disease.” See, Rev Rule. 2003-57, citing,
IRC Section 213(d)(9)(A). Cosmetic surgery that improves the taxpayer’s appearance,
but does not substantially promote the proper function of the body or prevent or treat
illness or disease is not deductible. See, Rev. Rule 2003-57, citing, IRC Section
213(d)(9)(B).
Cosmetic surgery, such as breast reconstruction surgery after cancer, that minimizes a
deformity due to the disease, is deductible as medical care, subject to the seven and a half
percent (7.5%) floor. Similarly, the cost of laser eye surgery is deductible under IRC
Section 213(d)(9) because it promotes the proper functioning of the eyes. See, Rev Rule
2003-57, citing, CB-83. Rev. Rule 74-429, 1974-2 C.B.83.
Teeth whitening is considered purely cosmetic, since it does not treat a physical or mental
disease or promotes the proper function of the body. Therefore, it is not deductible.
Weight loss programs may be deductible if undertaken due to a specific disease
diagnosed by a physician, such as obesity, hypertension or heart disease. However, the
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cost of diet food or beverages are usually not deductible, as they are usually considered
replacement for regular food, except under certain circumstances.
Certain payments to relatives are not treated as paid for medical care. If the medical
services or qualified long term care services are provided by the person’s spouse or by
certain relatives defined in IRC section 152(a) (directly or through a partnership,
corporation or other entity), then they may not be deductible under Section 213 (d)(11)
unless provided by a licensed professional.
If the child hires assistance for the parent, care must be taken that the appropriate tax
filings are made. Although many people consider domestic help “independent
contractors,” if the employer sets the hours and controls the work, the worker may be
considered an “employee” rather than an “independent contractor.” With employee
status comes many responsibilities, including but not limited to federal employment
eligibility verification for immigration purposes, federal and state tax withholdings,
Social Security, Medicare, unemployment insurance, worker’s compensation insurance
and disability insurance.
The care and support of a parent is a valuable service not only to the parent, but to society
as well, and our government recognizes it as such by permitting certain tax benefits.
Sharon Kovacs Gruer, CELA, with offices in Great Neck, New York, is chairperson of the Practice
Committee of the Elder Law Section of the New York State Bar association, is the immediate past chair of
the Nassau County Bar Association Taxation Committee and is the Vice Chairperson of the Trust SIG of
the National Academy of Elder Law Attorneys
It is time for your clients, friends and relatives to take action NOW. They can call my
office toll free at 1-888-634-6675 to set up a free consultation to discuss their situation.
Remember
“Those Who Plan Ahead Win.
Those Who Don’t Plan Ahead Lose.”
This article is not intended as legal advice. It is basic information. I would recommend that you call
Attorney Timothy P. Crawford for a free conference to discuss your situation in more detail. Attorney
Timothy P. Crawford can be reached toll-free at 1-888-634-6675. When you call in, please mention the fact
that you have read this article.
Attorney Timothy P. Crawford is a Board *Certified Elder Law Attorney. He has been
Board Certified by the National Elder Law Foundation which has been approved as the
Sole Certifying Organization for Elder Law Attorneys by the American Bar Association.
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Timothy P. Crawford was invited to join the Council of Advanced Practitioners of the
National Academy of Elder Law Attorneys (NAELA) in August of 2005. The **Council
of Advanced Practitioners (CAP) is a small group of premier elder law attorneys, all of
whom have been members of NAELA for at least 10 years, are certified as elder law
attorneys by the National Elder Law Foundation, and are AV rated by Martindale
Hubbell.
OFFICES IN RACINE & BROOKFIELD
“Helping Families in Wisconsin for Over 30 Years to Protect
Their Assets from Nursing Home Care Costs”
© Copyright by Attorney Timothy P. Crawford. This document can be used without the advance written
permission of Attorney Timothy P. Crawford however you must disclose the fact that Attorney Timothy P.
Crawford is the author.
"This article prepared by Attorney Sharon Kovacs, a friend of Attorney Timothy P. Crawford, is used here
with permission."
TPC/sam/DATA-TPC/MARKETING FORMS/ARTICLE-TAX CONSIDERATIONS FOR CAREGIVERS-GRUER
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